Widening the view to the daily time frame, investors get an added perspective of the Nasdaq's recent price activity.

Again, with Monday's close at 2,333 the index is positioned precisely on its five-year breakout point.

On further weakness, additional support holds around 2,314, followed by another floor at 2,300. Note the Nasdaq's 50-day moving average currently holds at 2,296.

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The Dow industrials is testing notable, but less significant, support around 11,100.

On further weakness, the Dow's 50-day moving average holds at 11,072. Note that the benchmark has closely observed its 50-day as support since mid-February.

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The S&P 500's wider view illustrates its pullback to the breakout point.

Again, the index closed Monday at 1,296.6, almost exactly matching support at the January and February highs.

If it should violate the breakout point, the S&P's 50-day moving average currently holds nearby, at 1,288.

The bigger picture

Over the past two sessions, the Nasdaq and the S&P 500 have pulled back to their respective breakout points -- the 2,333 and 1,295 areas, respectively.

So on one level, how they respond from here should help dictate the near-term market tone.

Yet while waiting on the markets to break in one direction or another, it's worth reiterating that the way each index pulled back Friday was slightly ominous technically.

Looking at the Nasdaq, it formed a bearish candlestick pattern Friday known as a key reversal. Following an uptrend, the characteristics of a key reversal follow:

The open (2,366) must be above the prior day's close (2,361).

The day must make a new high (2,375).

The close (2,339) must be below the prior day's low (2,347).

The elements above were satisfied, and each was well defined -- there weren't close calls.

That means the Nasdaq's knifed straight into its breakout point, forming a bearish key reversal -- not the most promising near-term development.

Meanwhile, the S&P 500 didn't form a key reversal Friday, but its downside conviction, as measured by volume statistics, approached bearish extremes.

Specifically, declining volume outpaced advancing volume by an eyebrow-raising 6.5 to 1 Friday, reaching into excessive territory that can precede a major trend reversal.

So like the Nasdaq, the S&P has dropped into its breakout point behind 6.5 to 1 negative internals. Again, not the most bullish development.

To be clear, the longer-term uptrend is comfortably intact. Each major index is positioned above its major moving averages, and the moving averages themselves are upward sloping.

Yet looking out over the next several weeks, the way the indexes respond to this well-defined support could set the near-term tone.

In the end, the near-term question is straightforward: Can the S&P 500 and the Nasdaq hold their respective breakout points -- the 1,295 area on the S&P, and Nasdaq 2,333?

If so, this is a garden-variety pullback to support.

Conversely, if each violates support with another session like Friday's, the prospect of a near-term consolidation phase, similar to what transpired in mid-January, improves.

Tuesday's watch list

The charts below identify names worth tracking from a technical perspective. These are intended as radar screen names -- sectors or stocks positioned to move near term. For the original comments on the stocks below, check out The Technical Indicator Library.

Apple Computer
AAPL, +1.63%
was initially profiled March 30 after it lifted from its 200-day moving average on increased volume.

At Monday's close, it had added 10.2% but remains well positioned from a longer-term perspective.

Last week, it cleared a three-month downtrend and its 50-day moving average after Apple announced its decision to make Microsoft Windows compatible on Macintosh computers. The breakout has come on strong volume, increasing the chances of a sustainable new uptrend.

With those gains, the risk/reward on new positions is not good. In fact, it wouldn't hurt to take profits on at least part of any open position.

Yet for the longer term, the sustained, strong-volume spike is bullish. A cooling-off period -- similar to what transpired in February and March -- would help position Pacific Ethanol to extend its gains.

Company

Symbol

Mon Close

Support

Resistance

Whirlpool

WHR

$90.31

$89.60

$96.00

Whirlpool
WHR, +0.82%
spiked in late March after getting regulatory approval for its merger with Maytag.

Since then, it's consolidated its gains, pulling back to the breakout point on lighter volume.

The strong-volume breakout and shallow consolidation confirm its primary uptrend.

The rally resolves a bullish ascending triangle, and its near-term outlook should remain higher barring a close back under the breakout point around $8.

Still well positioned

The table below includes selected names recently profiled in The Technical Indicator that remain well positioned. For the original comments on the stocks below, check out The Technical Indicator Library.

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